Strategy Analytics: China down 11%, Apple iPhone down 22%

The latest Strategy Analytics data makes grim reading to anyone who still likes to think everything is perfectly fine, confirming a dramatic slow down in growth in China even while other economies are held afloat by a one-time tax break.

Apple down for 8 of 12 quarters

Yiwen Wu, Senior Analyst at Strategy Analytics, said, “China smartphone shipments declined 11 percent annually from 121.3 million units in Q4 2017 to 107.9 million in Q4 2018. The Chinese smartphone market is in recession and has declined for five consecutive quarters. The smartphone market is suffering from longer replacement cycles and weak consumer spending.

“Smartphone shipments declined 11 percent annually to hit 408.5 million during full-year 2018. The past year has been exceptionally tough and one the smartphone industry will want to forget.”

That’s all true, but it is worth pointing out that over 100 million phone sales is still a pretty big number — and even if Apple’s share slips, it does at least make a few dollars on each sale — others are not so lucky.

Apple under pressure (but still makes return)

Linda Sui, Director at Strategy Analytics, confirmed Apple’s China crisis, “Apple overtook Xiaomi and nudged up to fourth position with 10 percent smartphone marketshare in China in Q42018. However, iPhone shipments dropped 22 percent annually and this was the firm’s worst performance since early 2017.

“Apple iPhone has now fallen on a year-over-year basis in China for 8 of the past 12 quarters. Apple has been under pressure in China for the past three years. Ongoing patent battles with Qualcomm are a distraction, while Apple is being heavily criticized for its expensive retail prices. Apple is in danger of pricing the iPhone out of China.”

Neil Mawston, Executive Director at Strategy Analytics, said, “Huawei shipped 30.0 million smartphones and captured a record 28 percent marketshare in China during Q4 2018. Huawei’s growth soared 23 percent annually and it is now the clear market leader. A strong product portfolio, famous brand and extensive retail channels were among the main success factors.”

What about the others?

Woody Oh, Director at Strategy Analytics, added, “OPPO clung on to second place with 21 percent smartphone marketshare in China during Q4 2018. OPPO’s shipments fell 2 percent annually, but still grew faster than average. Huawei is piling pressure on OPPO in mid-tier and offline retail channels across major cities such as Shanghai. OPPO is trying to fight back, by targeting more online channels with improved models such as the K series.

Products from Amazon.co.uk

Vivo sits in third position with 21 percent marketshare and is very close to overtaking OPPO. Vivo’s 8 percent annual growth rate is bettered only by Huawei. Vivo is growing online with the Z series, and launching more premium models from its NEX range that aim to differentiate by tech innovation.”

Yiwen Wu, Senior Analyst at Strategy Analytics, added, “Xiaomi slipped to fifth place and captured 9 percent marketshare in China during Q4 2018. Xiaomi’s strong growth in its home market has been halted and it slumped 35 percent annually. Xiaomi suffered from overstocked channel inventories, plus intensified competition from rivals Huawei and Vivo.

The shake down

While Apple may be under pressure, many of the pressures it faces are very different from those being handled by its competitors, who are struggling to make money on more or less similar devices they are bringing to an intensively price competitive market. Apple is not competing on price.

The effect? As I’ve predicted in the past, the struggle in the low- and mid-tier brackets is driving what looks like some form of market consolidation. Strategy Analytics:

“The top five brands now account for an impressive 9 in 10 of all smartphones shipped in China. Many smaller vendors below the top five, like Meizu, are struggling to keep up and profits are diminishing.”

For this industry, the beatings will continue until morale improves. And I think Apple could expedite that process by shipping a lower-cost 4-inch iPhone SE 2, which would put the mid-tier vendors under a brand new hammer of pricing pressure.

One can only imagine where such a device might be made (the iPhone SE was manufactured by Wistron in India, I believe).

2 Responses

Both my wife and I have SEs which work perfectly for all our needs
They use all of Apple’s cloud features and our Macs sync seamlessly. We are both over 60 but teck savvy. Not tempted to upgrade to bigger, newer iPhones. So I agree with you that Apple should reintroduce it to compete with all the others at the lower end of the market. Surely they could produce it and make an adequate profit

I think as the services becomes more important AAPL has an ecosystem that means it can move beyond price, while still also retaining premium appeal. It’s a dance. And I believe in an SE2 too. I think it’s the right thing to do

Apple’s plan to transform the world of credit cards in the image of Apple Card seems to have progressed further than anyone might have thought, thanks to a top-secret project with Mastercard...Innovate everything The news is that Apple, Goldman Sachs and Mastercard have been quietly working together to make similar technologies available for use by […]

Dolly Parton described love as “like a butterfly,” but that isn’t precisely the emotion Mac users have reported on use of the butterfly keyboard design Apple puts inside its notebooks.When keys take wing These keyboards have attracted much criticism since they were introduced, so much so that Apple has attempted to redesign them twice and […]

Apple has never quite managed to create a social network that works, but it seems to have a better chance than ever right now.All the ingredients are there The company has all the ingredients: A platform, loyal customers, and a growing range of media services that would benefit from the kind of pester power social […]

Recent speculation claims Apple may terminate support for some older iPhone models— including the popular iPhone SE — when it introduces iOS 13.We won’t know if this is true until WWDC, but it simply reflects consumer sentiment.People are moving on The smartphone industry is declining as consumers try to get more use out of their […]

Apple’s devices are far better defended against malware and viruses than other platforms, but does that mean they don’t need anti-virus software?No, yes, and maybe I’ve lost track of the number of times Mac users have told me Macs don’t need virus protection because the machines are inherently more robust against such attacks.I’ve also lost […]

While Apple CEO Tim Cook doesn’t think a four-year degree is necessary to be a proficient coder, he’s still prepared to invest in the nurturing next-generation engineering talent. And today Apple opened up the application process for new students to join its Developer Academy in Naples, Italy.The Naples connection The Apple Developer Academy at the […]

Hackers have used a security bug inside WhatsApp to install spyware through an infected WhatsApp voice call, and Apple users are affected.What WhatsApp users need to do If you are one of the 1.5 billion people who use WhatsApp, you should immediately update both your app and your iOS software to the latest version.The app update includes […]

You can throw all the money and technology you want at digital transformation, but if your end users are uncomfortable with your brand-new solutions, they will simply stop using them.Put the customer first Those are just some of the thoughts shared with me by Sam Johnson, chief customer officer at Jamf, following that company’s move […]

Apple may dramatically reduce the number of supported older iPhone models when it introduces iOS 13, a the latest rumor claims, but it isn’t yet clear on what consistent basis this decision may (or may not) be made.Closing the stable door Apple really did the right thing when it extended backward compatibility in iOS 12, […]

Why is privacy a luxury? Possibly because surveillance capitalist firms have subsidized product prices by collecting and trading in the personal data of the people that use their products, enabling them to sell hardware cheap.The consequences of convenience The crux of Google CEO Sundar Pichai’s argument against firms such as (obviously including but never named) […]